Correlation Between HSBC MSCI and HSBC Emerging
Can any of the company-specific risk be diversified away by investing in both HSBC MSCI and HSBC Emerging at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining HSBC MSCI and HSBC Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HSBC MSCI Emerging and HSBC Emerging Market, you can compare the effects of market volatilities on HSBC MSCI and HSBC Emerging and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in HSBC MSCI with a short position of HSBC Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of HSBC MSCI and HSBC Emerging.
Diversification Opportunities for HSBC MSCI and HSBC Emerging
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between HSBC and HSBC is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding HSBC MSCI Emerging and HSBC Emerging Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HSBC Emerging Market and HSBC MSCI is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on HSBC MSCI Emerging are associated (or correlated) with HSBC Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HSBC Emerging Market has no effect on the direction of HSBC MSCI i.e., HSBC MSCI and HSBC Emerging go up and down completely randomly.
Pair Corralation between HSBC MSCI and HSBC Emerging
Assuming the 90 days trading horizon HSBC MSCI Emerging is expected to generate 0.82 times more return on investment than HSBC Emerging. However, HSBC MSCI Emerging is 1.22 times less risky than HSBC Emerging. It trades about -0.12 of its potential returns per unit of risk. HSBC Emerging Market is currently generating about -0.23 per unit of risk. If you would invest 2,110 in HSBC MSCI Emerging on August 30, 2024 and sell it today you would lose (48.00) from holding HSBC MSCI Emerging or give up 2.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HSBC MSCI Emerging vs. HSBC Emerging Market
Performance |
| Timeline |
| HSBC MSCI Emerging |
| HSBC Emerging Market |
HSBC MSCI and HSBC Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HSBC MSCI and HSBC Emerging
The main advantage of trading using opposite HSBC MSCI and HSBC Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HSBC MSCI position performs unexpectedly, HSBC Emerging can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in HSBC Emerging will offset losses from the drop in HSBC Emerging's long position.| HSBC MSCI vs. Scottish Mortgage Investment | HSBC MSCI vs. VinaCapital Vietnam Opportunity | HSBC MSCI vs. Edinburgh Worldwide Investment | HSBC MSCI vs. Baillie Gifford Growth |
| HSBC Emerging vs. HSBC FTSE EPRA | HSBC Emerging vs. HSBC SP 500 | HSBC Emerging vs. HSBC MSCI Emerging | HSBC Emerging vs. HSBC NASDAQ Global |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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